~ The Legislative Blog of the NJ League of Municipalities

Action Needed Today to Protect NJ Taxpayers and Municipalities

Tomorrow, the United States House of Representative will be asked to vote on a budget resolution. If passed in its current form, that budget would allow Congress, as it considers tax reform, to deny citizens the ability to claim a Federal Income Tax deduction for the amount of money they had already paid, in state and local taxes. This deduction, known by the acronym SALT (for State And Local Taxes), has been part of the United States tax code as long as there has been a federal income tax.

Repeal of SALT would lower home values and constrain New Jersey local budgets, which rely on property taxes to fund essential services and programs, more so than municipalities in any other state.

As a local leader, committed to what is best for your citizens and your municipality, please contact your Congressional District’s Representative in the House today. Sending a strong message of opposition to the elimination of the SALT deduction will help to ensure that New Jersey’s entire Congressional delegation will refuse to support any bill that puts this deduction at risk.

Take action today: Please call your member of Congress (202) 224-3131 and urge them to protect SALT.

Here are talking points from Americans Against Double Taxation below, which is working closely with the National League of Cities (NLC) and the US Conference of Mayors:

Property Tax Deduction Background and History

The Federal Income Tax Code allows filers to claim a deduction for the amounts they pay in State and Local Taxes. This deduction, known by the acronym SALT (for State And Local Taxes), has been part of the United States tax code as long as there has been a federal income tax.

SALT is one of the six original federal tax deductions and has prevented taxpayers from paying a tax on money that is already taxed (sometimes called double taxation), and has helped support state and local investments since 1913.

SALT Benefits the Middle Class

Nearly 86 percent of taxpayers who claim the SALT deduction have an adjusted gross income of under $200,000.

An overwhelming number of the 44 million taxpayers, who claim SALT, include in that deduction their property taxes (40.7 million), and many also claim the mortgage interest (35.4 million) deduction. Eliminating SALT will diminish the number of itemizers, increase the after tax cost of a mortgage, and is projected to result in a 10% decline in home values, in the immediate term.

SALT Benefits Homeowners

Eliminating the SALT deduction would raise taxes on middle class homeowners – even if the standard deduction were doubled. A recent study commissioned by the National Association of Realtors found that homeowners with an adjusted gross income between $50,000 and $200,000 would see an average tax increase of $815 if SALT were eliminated and the standard deduction were doubled.

SALT Supports the Community

SALT helps support public services and vital investments at the state and local level, including infrastructure, public safety, homeownership and education.

If SALT is eliminated, vital public sector services will be at risk. This is because the after tax cost to taxpayers of these services will increase, and state and local governments will find it harder to maintain the necessary level of services.

SALT is Bipartisan and National

SALT is claimed by 44 million taxpayers in all 50 states, including both Democratic and Republican districts.

High-tax states are not receiving subsidies from others as a result of SALT. To the contrary, states that get the highest return on the taxes they send to Washington are mostly lower tax states under the present tax law with SALT in place.

SALT Prevents Double Taxation and Preserves Fiscal Federalism

SALT prevents double taxation of Americans by allowing taxpayers to claim a deduction for the state and local taxes they have already paid from their incomes.

SALT maintains carefully balanced fiscal federalism by allowing state and local governments to support state and local services.

SALT has been a fixture of the federal tax code and our nation’s fiscal federalism for more than 100 years to guard against double taxation of households and protect the fiscal integrity of state and local governments, and it should remain in the tax code without limitation.